In a SEC filing yesterday, XM has officially confirmed that certain satellite radio receivers shipments have been suspended as part of an investigations to maintain FCC compliance.

In the filing, XM stated:

 As previously disclosed, on April 25, 2006, we received a letter from the Federal Communications Commission stating that its Office of Engineering and Technology Laboratory had tested the Delphi XM SKYFi2 radio and determined that its FM modulator wireless transmitter is not in compliance with permissible emission limits. We are also aware that Audiovox, manufacturer of the Audiovox Xpress, a radio designed to work with the XM system, received a similar letter from the FCC, and has suspended shipments of that product at the present time. We have been conducting a review of the SKYFi2, Xpress and other devices compatible with the XM system that use a wireless FM modulator to transmit XM programming from an XM radio to an FM radio. We have provided information to the FCC regarding the SKYFi2 radio in accordance with the FCC letter.

Further, we are implementing a series of actions involving various radios to bring them into compliance, including requesting our manufacturers to suspend shipments to retail of radios or accessories that may require changes to operating or installation instructions, or modifications to software or hardware, such as small attachments that reduce emissions through the antenna or cigarette lighter adapter. We will seek new equipment authorizations where appropriate, and expect to provide additional information to the FCC shortly, including test results for several XM radios, as modified, showing compliance with the in-vehicle testing criteria.

In this connection, the FCC recently (April and May) released clarifications of its procedure for in-vehicle testing in a selection of representative vehicles and our test data are being prepared based upon these procedures. We are working to limit the interruption in supply of certain models of XM radios to retailers, and we plan to have modified devices shipping to retailers in the near term. No health or safety issues are involved with these wireless XM radios, and this matter does not pertain to any XM radios which are factory installed in new vehicles. We can provide no assurances at this time that our actions will be deemed sufficient by the FCC, or that other remedies that may be required by the FCC will not have a material impact on our consolidated results of operations or financial position.

According to Radio Ink, XM spokesman Chance Patterson told the AP that other receivers that may face shipment suspensions include the Roady XT and the XM Sportscaster. 

[SEC Filing] 

Earlier today word came in that XM has stopped selling certain radio from their kiosks and from their online store. As further investigation showed that only satellite radio receivers with an FM-Modulator were the units being pulled. On XM's Online Store, most units were listed as "Out of Stock" with the exception of the Pioneer Inno.

Then Ryan from XM Fan made the said the following:

"official word from XM is they voluntarily stopped selling the radios with the wireless FM mod at their kiosks and online store until the FCC gives them a decision. This info is from a director of retail marketing at XM.

This is their company decision regarding their own stores, and does not affect radio sales at any other stores."

No doubt this is relating to FCC probes into the FM transmitter emission levels, which even went to far as to cause Audiovox to halt shipments of the Audiovox Xpress plug-and-play receiver.

(Note: at the time of writing this, the XM Online Store appears to be down for "site maintenance" - no word as to whether this is related.)

Thanks Bud and candlebougie!

UPDATE: The reason why the Inno was not pulled is because it has the benefit of allowing firmware updates. Apparently all the latest Inno / Helix receivers are shipping with (if I remember correctly) the v1.10 firmware which disables the FM Modulator when not plugged into the car kit. I believe - and please, correct me if I'm wrong - that v1.09 still as the FM Modulator activated when on-the-go. I can only assume that this is a proactive reaction to the FCC probes.

Fred von Lohmann is the senior staff attorney with the EFF, was interviewed by Steve Gordon for the latest installment of his Future of Music Business Internet Radio show (also available as a podcast). They discuss in length the RIAA vs XM Satellite Radio lawsuit, and Fred von Lohman has some incredible insight on the entire situation. Definitely worth listening to.

Fred von Lohmann also had some very poignent things to say about the lawsuit on MediaDailyNews. 

[Listen to the Podcast via MyRealBroadcast]

Here's some more gory details on the suit against XM Satellite Radio by the Record Industry. This suit does not just affect XM, and not even just SIRIUS indirectly (with their new wearable coming out soon, there's no doubt it will have recording capabilities), but jeapordizes all consumer electronic devices that can receive and record a broadcast of any sort (such as DVRs).

If you would like to view the actual filing, you can access it here (PDF - 33 pages).

Make no mistake, this is an attempt by the RIAA to change XM Radio's music license structure from performance (which terrestrial radio is privvy to) to a distribution license (like iTunes or Napster). In the lawsuit, the RIAA completely ignores the Audio Home Recording Act, even though that is exactly what XM designed the Pioneer Inno and Samsung Helix to be in compliance with. The AHRA specifically gives users of digital audio recorders the right to engage in home taping.

But the RIAA ignores the AHRA here. Why? Because 14 years after the AHRA was passed, the RIAA feels that with our evolving technology the AHRA no longer suits their interests. Hence the backing of The PERFORM Act.

According to several sources, XM offered the RIAA payments similar to the agreement made with Sirius, and in fact offered more compensation. But the RIAA didn't want this because it sets a precidence of a la carte device settlements. Yet another reason why Sirius isn't necessarily out of hot water yet. Should the RIAA be successful with this suit, and let's all hope they're not, they will be able to define the scope of a "distribution" right as any service that transmits and allows the recording of a broadcast. That means that not just satellite radio, but terrestrial radio and internet radio would all be at risk.

Ridiculous.

So what about the alleged damages? We've all heard that the RIAA is seeking $150,000 for EACH song saved by the Inno - but with 160,000 songs played per month - how exactly will the RIAA track these occurances? In the suit, they claim that XM has the capability to track each saved song through the XM+Napster interface. As soon as the Inno is plugged into the computer, it is "believed" that XM can then receive a transmission over the internet indicating that a specific song is saved.

But it doesn't stop there.

Because of the Helix/Inno ability to automatically buffer up to 10 minutes into a broadcast, the RIAA feels that those "recordings" are infringements as well. So XM should pay them for the cached music occurances as well. As the EFF points out, if half the Inno users are simply tuned in to XM's music content (not actively recording mind you, just listening to), the statutory damages would reach $37.5 Billion a year. Yeah... wait, what?! That obviously has no bearing on the "harm suffered" by the RIAA considering they pulled in $12.3 Billion last year.

The Inno does not allow transferring of the music off the device. It even allows you to buy the music you've recorded and protects the music with DRM that deletes the songs if you are no longer an XM subscribers. So how can these only be used for anything other than the facilitation of personal use?

[EFF.org via Public Knowledge]

Yesterday the record industry filed suit against XM Satellite Radio for "massive wholesale infringement," caused by the Samsung Helix and Pioneer Inno. The suit seeks $150,000 in "damages" for every song copied by XM customers using the device. How exactly the RIAA intends to track each occurance of a saved song is a mystery. But with 6.5 million subscribers, and approximately 160,000 songs played every month, the potential damages that the RIAA could seek out would be staggering (however no where realistic).

XM issued the following statement to Billboard Radio Monitor:

"These are legal devices that allow consumers to listen to and record radio just as the law has allowed for decades. The music labels are trying to stifle innovation, limit consumer choice and roll back consumers’ rights to record content for their personal use. This is a negotiating tactic on the part of the industry to gain an advantage in our private business discussions. XM Radio is the largest single payer of digital music broadcast royalties, and royalties paid by XM go to the music industry and benefit artists directly. XM will vigorously defend this lawsuit on behalf of consumers."

And the RIAA fired back stating the following:

"Not only are we fans of satellite radio, we consider ourselves partners and we celebrate the industry’s growth," the RIAA said in the statement. "From the outset, we understood the mutual benefits of digital broadcasts. In fact, we provided them with a major price break in our initial licensing agreement to help the industry get off the ground. That agreement has made it possible for satellite radio to grow.

"As we continue to transform our business model, the integrity of the digital marketplace is more important than ever. We want to work with our various partners to offer fans an extraordinary music experience in a variety of different ways, but everyone must play by the same set of rules and fairly compensate labels, artists, songwriters and publishers."

With XM being the biggest single payer of digital music broadcast royalties, they're playing by a very generous set of rules. SIRIUS can't be far behind XM in the amount of royalities they pay either. Both companies are being strongarmed by the RIAA cartel.

Remember that last month SIRIUS settled with the four major music labels (Universal, Warner, Song BMG and EMI Music Group), agreeing to pay an undisclosed amount in 'damages' and cap the production of the Sirius S50.

In a statement to the US Senate over The Perform Act - which essentially is the RIAA's method of bringing Washington into the negotiation - Gary Parsons, Chairman of XM Satellite Radio said, "Recording from the radio is not a download service. Everything recorded from the radio is locked to the device. It cannot be transferred to the Internet ensuring that it is only for personal use."

Back in October 2005, we learned that the RIAA was seeking $1 Billion from both XM and SIRIUS for the new music licensing contracts covering 2007 - 2012. The current $80 Million contract expires this year. Talk about disgusting negotiation tactics. Terrestrial radio, on the otherhand, does not pay a single dime.

[Reuters]
[Billboard Radio Monitor]

Thanks to everyone who sent this in! 

Well this is just fantabulous. The Perform Act - which you'll recall is an anti-satellite radio bill introduced in the Senate - is now getting a little sister, thanks to Reps. Howard Berman (D-Calif.) and Mary Bono (R-Calif.).

The Platform Equality and Remedies for Rights Holders in Music Act of 2006 - called... wait for it.... The Perform Act - is a companion bill to the senate version introduced in April. In short, both seek to increase the royalties that satellite radio (as well as cable and internet radio) should pay by 'redefining' what exactly the value is of these broadcasts and the definition of fair-use. Now, mind you, that terrestrial radio doesn't pay a dime for the rights to broadcast music - so because satellite radio, cable and internet radio are digital - they want to squeeze more money out of them change the rules. These bills would also effectively disable any sort of advanced recording function, thereby sabotaging any innovative approach to music listening. Read this post if you want a further explaination about this.

"One of America's greatest treasures is its intellectual property," said Berman. "People are listening to more music in more places than ever. Yet the music industry is in crisis, with its revenue declining from $14.5 billion in 1999 to $12.1 billion in 2004."

Translation: who cares about about the consumer, innovation and any progression in technology, the RIAA needs more money!

Now, it's really no surprise that Rep Howard Berman is introducing this bill. Especially when you realize that the TV/Movie/Music industry is his top campaign contributor, not to mention that the Recorded Music & music production industry favors Berman just a little bit (Berman is their #1 recipient for the 2001-2002 election cycle). Ulterior motives? Nahhh. Rep Mary Bono has similar industry contributors, though with TV/Movie/Music at the top, but maybe that's just because they're from California? *cough* bullshit *cough*

An XM Satellite Radio spokesman had this to say:

"This bill would curtail new, innovative and legal devices that listeners want and that generate significant royalties for a broad range of artists and songwriters. It is the recording industry's attempt to gain leverage in negotiations between satellite radio and the labels."

I couldn't have said it better myself. 

[via Billboard]

(Have you contacted your Senator yet? Well, now you can contact your Representative while you're at it. Please take 5 minutes and express your opposition to The Perform Act.)

The chairman of a subcommittee of the House Commerce Committee, Rep. Cliff Stearns (R-Fla.) plans to hold a hearing today on audio content and consumer electronics. Stearns will explore fair use, DRM and the need to protect copyrighted works.

Gary Parsons, chairman of XM Satellite, is set to testify, along with representatives from the NAB, Universal Music Group, and Intel.

Let's see what comes about from this. 

[RW Online] 

It's great to see the response from readers about how ridiculous The Perform Act is. It's funny how the RIAA is so willing to push legislation against an industry that provides so much potential and opportunity to actually sell music.

Satellite radio not only plays music, but plays music that otherwise would get little-to-no airtime. Back catalog tracks are finally getting the exposure they deserve, and in essence increasing general awareness of all genres of music. Broadening listener's awareness of music, means a stronger "long tail" for album sales. So why would they try to sabotage that? For short-term profits? C'mon.

Terrestrial radio shouldn't be sitting around giggling about this either. If enacted, The Perform Act could very well extend into other digital radio formats, like HD Radio.

But let's ignore the business aspects of all this. It's the listener, the consumer, who really gets the short end of the stick here. For those who want to know how this will affect them personally, here's a quick rundown of what The Perform Act wants to limit:

1. Satellite Radio content would be limited to real-time recordings - no scheduling - only programs or blocks of time.
   
2. You would not be allowed to record only music from specific artists, albums or genres.
   
3. The devices could not selectively playback (or even change the order of) individual songs from the recordings made off the air.

Limiting innovation and progress is not a way to sell CDs. That's just not good business.

Both XM and SIRIUS have, or will have, the ability to purchase songs you hear with a simple click while listening. That's something that actually helps sell music for these companies. But instead they choose to take a proactive lobbying approach, because of the fear that innovation will overtake their business.

So what can we do?

We need to mobilize and let your members of congress know that you oppose The Perform Act, S. 2644. And here's an easy way to do it. Visit the Home Recording Rights Colation, and voice your opinion. It's easy and really doesn't take too much time.

And to help everyone along, please share what you wrote so that others can use it as inspiration for their own emails.

[Voice your opposition of the Perform Act, S. 2644] 

With all the uproar that The Perform Act is causing among readers, I thought it would be nice for everyone to read some of Gary Parsons' testimony he made in front of the US Senate.

"Satellite radio is an American success story, and we play by the rules.  We pay for the right to play music.  And our manufacturers pay for our subscribers' right to record what is played."

More after the jump...

While SIRIUS may have reached agreements with the RIAA over the Sirius S50, these agreements are not applicable for their upcoming live SIRIUS Wearable unit due out later this year.

During today's earning conference call, Mel Karmazin suggested the agreement reached between Sirius and the four major record labels could be a one-time deal that won’t be repeated.

Karmazin said that their portable device "adheres to the law" and should be considered a legitimate consumer device with recording and playback capabilities.

Yet another reason why The Perform Act needs to come to a halt. Current and future receivers are at stake.

[Billboard Radio Monitor]